Texas Storm Forecast Is Painful Déjà Vu

Texans are understandably worried about the cold spell over the next few days, a painful déjà vu of a year earlier, when the state saw blackouts that left millions without power for days. At least 200 people died as a result of the storm, according to the Texas Department of State Health Services. The grid operator, as of Thursday evening, was forecasting demand on Friday morning to peak at roughly 73 gigawatts as temperatures drop. That is worryingly close to the 77 GW in demand the state expected to see at the peak last year; the grid actually ended up serving just under 70 GW at last year’s peak because so many generators were unable to meet demand.

The silver lining here is that ERCOT’s forecast seems to bake in a lot of caution. The low forecast for Dallas Friday morning called for around 17 degrees, for example. At the worst of last year’s storm, the temperature reached negative 2 degrees. The duration of the storm is also expected to be a lot less severe. Analysts said ERCOT’s demand forecast seemed high, considering the weather forecast, possibly to make sure more generators are available to supply electricity.

As of Thursday evening, conditions on the grid looked decent. There was about 85 GW worth of power generation available to run, more than enough to meet the expected demand. Power plants, in theory, should be better prepared: The grid operator said last month that most of the 324 generation units and transmission facilities that were tested fully passed inspection for new winterization regulations. Natural-gas production in Texas has declined almost 10% since the end of January, according to data from S&P Global Platts, but Texas saw half as much natural-gas production at the peak of the storm last year.

The major weak point last year was natural gas supply, and there a fundamental issue remains: The Texas Railroad Commission, which oversees the oil-and-gas industry, has limited regulatory oversight over natural gas.

“In some respects, it’s a provider of public needs, but the [TRC] doesn’t have any real regulatory oversight in terms of [natural gas pipelines’] rates or provision of service,” said Beth Garza, senior fellow at think tank R Street and former director of the independent market monitor for ERCOT. Though power plants were required to winterize ahead of this winter, oil and natural gas companies won’t face those requirements until 2023. Ms. Garza called the relationship between ERCOT and the TRC a dysfunctional, co-dependent relationship, saying that “they rely on each other but don’t understand each other.”

In an update Thursday, the Texas Oil & Gas Association said production declines will “increase throughout the day,” saying that factors included icy roads, power loss, high winds and freezing equipment.

This is a bit of a chicken-and-egg problem: Electricity shortages disrupt natural-gas producers, which in turn can’t supply the fuel to the power plants that need it. Natural gas is the largest source of electricity in Texas and 58% of power plants that experienced unplanned outages last year were using natural gas as fuel, according to a November report from the Federal Energy Regulatory Commission. The report found that roughly 18% of outages caused by the storm last year resulted from natural-gas producers losing power and being unable to send fuel to power plants. Natural-gas supplies, in turn, were to blame for about 27% of unplanned outages.

There are other things that remain the same, too. ERCOT remains largely an island of a grid, with limited connections to other ones, and there haven’t been substantial changes in the way homes are weatherized or demand response is handled. The risk that this winter storm will cause widespread blackouts is a lot less severe. But the bigger risk is that, if the Texas grid emerges largely unscathed this winter, decision makers will use it as an excuse to stall improvements.

Write to Jinjoo Lee at [email protected]